1996 (8) TMI 260 - AT - Customs

Summary

Issues Involved:
1. Determination of the assessable value of imported Low Density Polyethylene (LDPE).
2. Validity of the Sales contracts/confirmation.
3. Allegations of misdeclaration and under-invoicing.
4. Relevance of the Economic Times prices in the assessment.

Issue-wise Detailed Analysis:

1. Determination of the assessable value of imported Low Density Polyethylene (LDPE):
The Collector of Customs, Bombay, ordered that the value of LDPE imported from Brazil should be taken as US $780 per Metric Tonne for the purposes of assessment of Customs duty, rejecting the declared value of US $680 per Metric Tonne. The appellants contended that the invoice prices were genuine and the transaction was at arm's length, with no evidence of payment beyond the invoice amount. The Collector's decision was based on the assumption that the contract was placed in June 1987, with shipment in August 1987, thus applying the rate prevailing at that time. However, the Tribunal found that the Collector's approach was erroneous and that the April 1987 contract was genuine, supporting the invoice price of US $680 per Metric Tonne.

2. Validity of the Sales contracts/confirmation:
The Collector had initially found the sales contracts/confirmation dated 14-4-1987 to be genuine but concluded that it did not relate to the subject imports. The Tribunal, however, noted that all relevant documents, including the local indent, supplier's confirmation, and supplier's invoices, were held to be genuine. The Tribunal disagreed with the Collector's presumption that the contract must have been placed in July 1987 due to the shipment date, emphasizing that the April contract was valid and should be applicable to the imports.

3. Allegations of misdeclaration and under-invoicing:
The charge of misdeclaration of value and the proposal for confiscation of goods and imposition of penalty were dropped by the Collector. The Tribunal supported this finding, noting that there was no evidence to doubt the bona fide nature of the supplier's invoices and that the allegation of misdeclaration and under-invoicing had not been established.

4. Relevance of the Economic Times prices in the assessment:
The Collector had used prices published in the Economic Times to determine the assessable value, which was not disclosed in the show cause notice. The Tribunal found this approach unacceptable, noting that the appellants had referred to the Economic Times in their reply to the show cause notice. The Tribunal emphasized that the contracted price should be accepted, especially given the fluctuating market prices and the genuineness of the contract.

Conclusion:
The Tribunal concluded that the Collector's order enhancing the assessable value declared by the appellants could not be sustained. The Tribunal set aside the Collector's order and allowed the appeals, accepting the invoice value of US $680 per Metric Tonne for the purposes of assessment of Customs duty. The Tribunal's decision was supported by previous rulings in similar cases, emphasizing the acceptance of contracted prices in fluctuating markets when the contracts are genuine.